What Does General Liability Insurance Cover?
GL insurance protects your business from claims of bodily injury, property damage, and advertising injury caused by your operations. Here is exactly what is and is not covered.
Three Core Coverages
Bodily Injury
Covers medical costs, legal defense, and settlements when someone is physically injured on your premises or by your business operations.
- ✓Client trips on a loose carpet in your office
- ✓Delivery worker drops a box on a bystander's foot
- ✓Customer slips on a wet floor in your store
Property Damage
Covers repair or replacement costs when your business operations damage someone else's property.
- ✓Contractor accidentally breaks a client's window
- ✓Cleaning crew scratches a hardwood floor
- ✓Landscaper hits an underground sprinkler line
Advertising Injury
Covers legal defense and settlements for claims of libel, slander, copyright infringement, or misappropriation in your advertising.
- ✓Competitor claims your ad copies their tagline
- ✓Someone sues over a negative review you wrote
- ✓Copyright holder claims you used their image without permission
What GL Does NOT Cover
Professional Errors (E&O)
You need: Professional liability insurance
Employee Injuries
You need: Workers' compensation insurance
Your Own Property
You need: Commercial property insurance
Vehicle Accidents
You need: Commercial auto insurance
Cyber Incidents
You need: Cyber liability insurance
Employee Discrimination
You need: Employment practices liability (EPL)
Intentional Acts
You need: Not insurable
Pollution / Environmental
You need: Pollution liability insurance
Real-World Scenarios
Your employee drops a tool on a client's floor, cracking a tile
Covered: Property damage
Client claims your consulting advice cost them money
Not covered: Professional error (need E&O)
Delivery driver hits a parked car with your company truck
Not covered: Vehicle accident (need commercial auto)
Customer slips on ice outside your storefront
Covered: Bodily injury (premises)
An employee injures their back lifting heavy boxes
Not covered: Employee injury (need workers' comp)
Your social media ad accidentally uses a copyrighted photo
Covered: Advertising injury
Policy Limits Explained
GL policies have two key limits: per-occurrence (maximum per single claim) and aggregate (maximum total per policy year). Standard limits are $1M per occurrence and $2M aggregate.
If you have a $1M per-occurrence limit and face a $1.5M judgment, your insurer pays $1M and you are responsible for the remaining $500K. If you have two $800K claims in one year with a $2M aggregate, your insurer pays both in full ($1.6M total). A third claim that year would only be covered up to the remaining $400K of your aggregate.
Moving to $2M/$4M limits adds roughly 35% to your premium but doubles your protection. For most small businesses, $1M/$2M is adequate. Businesses with higher revenue, more employees, or work on larger projects should consider $2M/$4M.
Updated 11 April 2026